City Moves On Bill To Create Investment Advisory Unit

A bill that had been idling in committee since May to establish an investment advisory committee cleared Allentown City Council's administration committee last night.

When it first came up, committee members locked horns with city administration officials regarding the need for the advisory group.

At that time, Council President Watson W. Skinner said the public wanted such a committee in light of the problems the city encountered with its $510,000 investment with ESM Investment Securities, which has declared bankruptcy.

Various city officials have said they are sure the city will get its money back, plus interest.

There was no debate on the bill last night.

N. James Fluck, director of administration and finances, andKenneth H. Kline Jr., manager of treasury and accounting operations, said they are not against an advisory committee.

Fluck said he is not opposed to getting someone else's opinion. Kline said his only concern is, "I wouldn't want a committee putting a hamstring on our (investment) policy."

Referring to the ESM experience, Councilwoman Karen Ritter said she does not feel anyone in the city can be blamed for what happened.

As for the investment committee, she views its role as "providing any assistance that is needed."

The committee will be composed of the manager of treasury and accounting operations; the president of City Council or a designee; and two members of the investment community appointed by the mayor. The last two members would serve with the understanding that their firms would not participate in investments recommended by the committee.

John Harry said there could be an "appearance of impropriety if a person gets a large percentage of the portfolio."

Kline said the institution selected to handle an investment is "the highest bidder at that particular moment."

Councilwoman Emma Tropiano asked whether Allentown banks could not be favored, "even if we lose a point."

Fluck said the city does not follow that practice, explaining, "We don't know where the money is going to go. That's the reason it's a competitive situation . . .. It's the city's responsibility to get as much interest as possible."

But he said most of the investments are handled through local banks.

Tropiano asked what the city's policy would be if an out-of-state bank offers the best deal.

If that is the case, Kline replied, "our policy is not to exceed their insurance level."

The investment committee is to meet periodically to review the city's investment policy and make recommendations for investments, if needed.

In another financial matter, the committee recommended allocating $175,000 to cover tax monies due Allentown School District and AT&T.

The school district is to get $125,000 as its share of overestimated income from real estate transfer and occupational privilege taxes. Both governmental bodies levy the two taxes.

The other $50,000 will be a refund to AT&T for its overpayment of property taxes resulting from its successful assessment appeal. Fluck said a refund of $71,000 already has been paid to the company.

Fluck noted that AT&T will not have to pay city property taxes for the next four or five years as a result of the assessment appeal.